2-Year vs 5-Year Fixed Rate Comparison

A 2-year fix and a 5-year fix appeal to different priorities. A 2-year fix can offer an earlier opportunity to review the market, while a 5-year fix offers payment certainty for longer. Neither benefit is assigned a monetary value by the calculator.

This calculator starts with a 2-year and 5-year fixed mortgage so you can compare their known initial-deal costs. You can adjust the periods if the products you are considering differ. The calculator compares the costs that are known at the start of each deal. It does not predict what mortgage or interest rate may be available when the 2-year fix ends.

Related reading:

• 2-year vs 5-year fixed mortgage guide
• Fixed-rate mortgages explained
• Fixed or variable mortgage: how to choose

What the comparison shows

Each mortgage is calculated over its own fixed period: 24 months for the 2-year fix and 60 months for the 5-year fix. The calculator does not use a shared comparison horizon. Its annualised measures make differently sized fixed periods easier to compare, but the underlying cash-flow calculations still cover different durations.

For each deal it produces four calculation modes:

• Repayment, fee paid upfront
• Repayment, fee added to the loan
• Interest-only, fee paid upfront
• Interest-only, fee added to the loan

The calculator does not produce one universal winner. A product can rank differently depending on repayment basis and fee treatment.

Try the comparison tool

The example below is set up as a 2-year and 5-year comparison, although the fixed periods remain editable. To use it, enter your mortgage amount and full mortgage term, then add the fixed period, initial rate, static arrangement fee and percentage arrangement fee for each deal.

The static and percentage fees can be used independently or together. A product can also have neither. The full mortgage term is needed to calculate repayment-mortgage payments and the balance remaining at the end of each fix. You do not need to choose a repayment type: the calculator automatically produces both interest-only and repayment results.

Repayment modes

Use the Interest only and Repayment tabs to see both repayment bases. Interest-only payments cover interest but do not reduce the original mortgage balance; repayment payments include interest and capital.

The Interest only tab is the default results view, but this does not mean the calculator recommends interest-only borrowing. The "Capital remains payable" warning means an interest-only borrower still owes the mortgage principal when the fixed period ends.

Repayment calculations account for capital reduction throughout the fixed period. As a result, Balance when fix ends is usually lower for a repayment mortgage, but remains unchanged on an interest-only mortgage unless a fee is added to the loan.

Fee treatments

Each result is shown twice: once where the arrangement fee is paid from savings (Fee paid upfront) and once where it is added to the mortgage (Fee added to loan).

Adding the fee to the mortgage increases the opening balance, monthly payment, interest charged and balance remaining. The calculator counts the full arrangement fee as a borrowing cost in both treatments.

Interest caused by financed fee is the additional interest charged during the fixed period specifically because the arrangement fee was added to the loan. The percentage fee is calculated from the original mortgage amount and can be combined with a static fee.

Headline winner

The summary at the top identifies which deal has the lower annualised borrowing cost in each of the four repayment and fee scenarios. It is the calculator's principal summary.

The banner is based on the calculator's annualised cost rate, not solely on the headline mortgage rate or monthly payment. It is not definitive advice. It is the lower result under the figures entered and the selected calculation mode. The same deal may appear in all four positions, but that is a calculation result rather than a general recommendation.

Output definitions

• Monthly payment: the estimated payment during the initial fixed period under the selected repayment basis and fee treatment.
• Interest during fix: all interest charged over that product's stated fixed period.
• Capital repaid: the reduction in mortgage principal during the fixed period. It is zero for interest-only calculations.
• Balance when fix ends: the estimated amount still owed after the final monthly payment in the fixed period.
• Borrowing cost during fix: interest during the fix plus the full arrangement fee. Capital repayments are excluded because they reduce the debt.
• True Cost: borrowing cost plus the balance remaining when the fix ends. It is not total cash paid, APRC, or the lifetime cost of the mortgage.
• Annual borrowing cost: borrowing cost during the fix divided by the number of fixed-period years.
• Annualised cost rate: annual borrowing cost divided by the original mortgage amount, expressed as a percentage.
• Effective initial-deal cost rate: a cash-flow-based rate that accounts for when payments occur, how fees are treated and the balance remaining when the fix ends.

Annualised cost rate is the simpler product-ranking measure, while the effective rate provides a more timing-sensitive view. Neither calculation is APRC. APRC follows a regulated methodology and normally incorporates assumptions beyond the initial fixed period.

How the comparison works

The calculator models each deal month by month over its initial fixed period, using the mortgage amount, full term, rate and fees entered. Repayment calculations reduce the balance each month, while interest-only calculations leave the principal outstanding.

The model uses monthly interest calculations. Actual lender illustrations may use daily interest and lender-specific rounding.

The calculator does not assume the 2-year mortgage repeats, charge another product fee after two years, or predict the next available rate.

Another product can be added if you want to compare a third option alongside the two principal deals. The calculator does not currently display a single consolidated difference between the two products.

Copy comparison link

Use Copy comparison link to save the figures entered or share the same comparison with another person. The link preserves the mortgage amount, term, fixed periods, rates and fee inputs. It does not store personal data and is not a mortgage quote.

Factors the calculator does not model

The factors below are important to a 2-year-versus-5-year decision, but they are not calculated by this tool:

• The mortgage available after the 2-year fix: the calculator does not predict future products, rates, or follow-on fees.
• Future product fees, lender standard variable rates and remortgage costs: none of these are modelled.
• The value of five years of payment certainty: payment certainty has benefits the calculator does not price.
• Early repayment charges (ERCs): longer fixes usually come with ERCs that apply for the full fixed period, which can limit flexibility if your circumstances change. See the early repayment charge calculator.
• Overpayments, cashback, incentives, legal costs and valuation costs: not included.
• Changing property values or changing loan-to-value (LTV): not modelled. You can explore LTV separately with the loan-to-value calculator.

A few practical considerations follow.

Rate trends provide decision context: nobody can predict rates with certainty. A longer fix protects you if rates rise; a shorter fix could benefit you if rates fall. This is not a calculator output or forecast.

Remortgaging again sooner is a practical consideration that comes with a 2-year fix. It is not evidence that the displayed 2-year result includes another remortgage. The calculator covers only the initial fixed period entered.

For a full walkthrough of these decision factors, read our 2-year vs 5-year fixed mortgage guide.

Results are illustrative, do not constitute advice or an offer, and depend on the accuracy of the figures entered. For a recommendation tailored to your situation, speak to one of our advisers about suitability, future-rate risk, ERCs and personal circumstances.